Today's Hearings on the Bailout: Price???

Bernanke and Paulsen were before the Senate Banking Committee today asking for power to spend $700 billion on mortgages and mortgage backed securities.  Senators asked the critical question repeatedly and in several different forms:  How will your price the mortgages and the MBSs that you will buy???  When the government buys it will destroy market prices -- what the government will pay will be the market price.  I laughed when I read Bernanke's prepared statement in which he noted that the government needs to buy these assets to give "liquidity" to illiquid assets, which will happen, and to re-establish "price discovery" in the private markets, which the buyoout will surely not do.  The goverment buying price will be the only "price discovery" we will see and it is not private.  The answers of Bernanke and Paulsen to the basic question were evasive -- we learned only that the Treasury wanted the flexibility to do whatever it deemed to be in the best interest of the country -- be they auctions or something else.  Only Bernanke, in a moment of peak, revealed that the Treasury would buy at "hold to maturity" prices rather than "fire-sale" prices.  What does this mean? Does it means that Treasury will price toxic junk as if the payors will not default?  I hope not.  If so, whoever holds this stuff will get a tremendous windfall.